Recent success in introducing road pricing, as well as recent opinion polls, suggest that tolls are politically viable if they benefit a large majority of drivers. This paper analyses the welfare effects of an optimal time-varying toll imposed during the morning journey to work, employing Vickrey's bottleneck model and assuming fixed demand. The toll benefits drivers with high unit values of travel time and schedule delay. Other drivers can become worse off, even with an equal per-capita rebate. Capacity expansion benefits drivers in proportion to their trip costs. If initial capacity is sufficiently small, a toll-financed expansion leaves all drivers better off. (Author/publisher).
Abstract